Self Employment Tax Lawyers in Edmond
In the U.S., including in Edmond, Oklahoma, taxes are levied on employees, which are typically deducted from their paychecks. The ones that most people are acquainted with are the Medicare and Social Security taxes. The idea is that workers pay into these programs during their entire working lives, and then enjoy the benefits they provide once they retire.
Individuals who are self-employed are still responsible for these taxes, and are responsible for figuring out how much they owe.
Typically, it's the employer who does all the calculations, deciding what deductions need to be made from a worker's paycheck to cover his or her tax liability. But if you are your own boss, you have to do this, and confirm that your figures are accurate.
Self-Employment tax obligations in Edmond, Oklahoma
If you derive even a small percentage of your income from running your own business, or working as an independent contractor, you have to pay the "self-employment tax." This tax applies to everybody who makes more than per year from self-employment.
For usual employees, Social Security and Medicare payments are made in equal parts by the employee and employer. This essentially means that every employee's contribution to his or her future Medicare and Social Security benefits is matched by the employer.
However, if you are a self-employed business owner in Edmond, Oklahoma, you are liable for both the employee and employer contributions to Medicare and Social Security. This essentially doubles your self-employment tax rate.
The self-employment tax rate is 15.3% of all self-employment income, assuming your income from self-employment exceeds per year in Edmond, Oklahoma. But half of your self-employment tax liability can be deducted from your income tax. This results in a slightly reduced income tax bill, which partially offsets this additional tax burden. It essentially means that the self-employment tax only applies to 92% of your income, as opposed to all of it. This means that your effective self-employment tax rate is about 14%, as opposed to over 15%.
Can a Edmond, Oklahoma Tax Attorney Help?
If you are self-employed in Edmond, it's extremely important for you to be diligent in keeping records of your income and expenses, to ensure that you pay all the self-employment taxes that you owe (and also to make sure you don't over-pay). You may one day need a tax attorney to advise you with a legal issue, and they can help you far more efficiently if you are able to quickly present them with all the relevant information.
If you have any difficulty calculating your self-employment tax liability, an efficient Edmond, Oklahoma tax attorney would likely have very little trouble assisting you figure it out. A reliable lawyer can also give you practical legal advice, which can help you avoid more egregious tax law issues in the future, by dealing with them before they become problematic.